Business 501
Managerial Accounting
Case Study 03
Ethics in Business
Kajli Agrawal

The principles and values that define an individual’s activities and decisions are known as ethics. It is hence important for any organization to set a code of ethics that would drive the organization in its policies, decisions and programs. The definition of Ethical code of an organization can play a pivotal role to the reputation, productivity, culture and the entire business.
The ethical code with which the employees are treated by their management has an adverse impact on the morale of the employees. The ethics, with which a leader treats his subordinates, encompasses discipline and creates an acceptable environment for the employees. The high standards of ethical behavior shown by the leaders in a company play an important role in encouraging the workers in the organization to meet that same level. Henceforth, ethical leadership shown the management of an organization enhances the company’s reputation in the market. This in turn improves the productivity of the company and also the integrity of the company in the market.
Ethics are not just a need but a necessity for an organization because a healthy and positive corporate culture not only improves the morale among the employees in the organization but also the productivity and employees retention. This in turn only benefit the company financially as higher levels of productivity improves the efficiency of the company and also an increase in employee retention reduces the cost of replacing employees. For example, Microsoft has donated over $100 million (£63 million) to more than 18,000 non-profit enterprises worldwide, and last year launched a youth education initiative to help 100 million young people across the world (“Ethical strategic management process and decision making”, n.d.). All of this helped the company tie for top spot in the Reputation Institute’s ranking of the world’s most reputable companies, along with Google, BMW and Walt Disney.
It can be hard for consumers to gain a better understanding of what the charitable claims made by companies really mean. Angela Kail, head of funder effectiveness research & consulting at New Philanthropy Capital, a charity, says: “Lots of companies talk about [corporate social responsibility] but it’s hard to get any sense of scale, and what the companies are actually achieving” (“General Guidelines for Ethical Decision Making”, n.d.).
Ethics does affect decision making for mangers in various processes such as in hiring, employee evaluation, organizational discipline and last but not least in the termination. A leader or manager encompass various duties and it is very important for a person shouldering such responsibility or leading or managing other employees to understand how important a role ethics plays I their decision making. A good example as to how ethics is affected by managerial decision is as follows. A year ago the Human Resource Director of a profound marketing company hired her nephew and later hired her daughter too. HR has access to all records including attendance. An employee who also personally worked with the daughter of the HR director was allowed only three personal days. The daughter however was absent and late on several occasions but was never questioned. It takes 30 days to work off only 1/2 of a point and, once the points get so high, depending on what time of the year it is, the employees only have a short time period to work them down and not be let go. When all the employees had to sign a waiver and work their points down whenever they exceeded 5 ½ but the points of the daughter of the director never exceeded even though it was evident to all the employees that she has been taking personal days off more than what she is supposed to. Her manager in HR did seem bias to the daughter of the HR director and this was ethically wrong to all the other employees in the company (“Ethical Role of the